Senate Passes Crowdfunding Bill, Bounces It Back To House

Senate Passes Crowdfunding Bill, Bounces It Back To House

The U.S. Senate on Thursday afternoon voted overwhelmingly to pass an amended version of the so-called JOBS Act, a bill designed to ease regulations on private companies to allow startup companies to solicit investments from people over the Internet using crowding websites like Kickstarter. The amended version of the Senate bill, though, imposes some additional restrictions that a House version of the bill, passed overwhelmingly last week, didn't feature, such as forcing crowdfunding websites to make sure that their early investors are educated investors and to do background checks on companies soliciting investments. Now the amended JOBS Act heads back to the House for another vote. President Obama has said he'll sign the bill.

WASHINGTON, DC – Oregon’s Senator Jeff Merkley issued the following statement after Senate passage of his amendment to provide online funding for startup companies while instituting strong protections for investors:

“Crowdfunding has the potential to unleash a wave of new economic opportunity by letting small businesses and start-up companies use the Internet to harness the ‘wisdom of the crowd’ to fund new investments. Small businesses are our engines of job creation, so I am excited about this new marketplace and the potential for small businesses with great ideas to see breakthroughs in their ability to grow and create jobs.

“For this new investment market to thrive, however, investors must have confidence in provisions that block predatory practices. The House legislation lacked these provisions. By failing to require any information on companies and any accountability for the accuracy of information companies do provide, the House bill paved a path to pump and dump scams. This would have hurt our citizens and irreparably damaged crowdfunding markets from the outset. The Senate action today fixes that. It puts in place commonsense rules of the road that will prevent fraud and I look forward to continue working to help this new small business marketplace thrive. And I appreciate the advocacy of the on-line community that worked so closely with us to get it right.

“However, I voted against final passage today because the Senate did not address dangerous new loopholes in other sections of the bill. The overall package will allow companies to mislead investors, regulators and the public.”

The President is grateful that the Senate acted in a bipartisan way to move forward key ideas the President proposed last fall that will help our small businesses and startups access capital they need to grow and create jobs. We are heartened by the important investor protections added to the crowdfunding provision and will be vigilant in monitoring this and other elements to ensure the overall bill achieves its goal of helping entrepreneurs while maintaining protections for investors. We urge the House to adopt these important changes.

While this vote marks a moment of bipartisan cooperation, there is much more work to be done to create an economy that is built to last, and we encourage Congress to act on additional measures like rebuilding our nation’s crumbling roads and bridges, putting our teachers back in the classroom and first responders back on the beat, and reauthorizing the Export-Import Bank which thousands of American businesses and their workers depend on to stay competitive in the global economy.